New bill aims to change how startups are funded

17 March 2012

Transcript

Notoriously small businesses have always had challenges getting access to capital and even more so in this economy.
But raising money is going to get a lot easier if they jump start our business start-ups or Jobs Act becomes law.
There are two main fundamentals of the Job Act.
First of all, it will let small businesses raise money from individuals that previously couldn't invest in companies because they didn't make enough money they want and credited investors and secondly, it will let these businesses advertise to raise money which has been illegal so far.
And although the bill hasn't been signed by the president yet, entrepreneurs are cheering.
This act would fundamentally change access to capital for small start-ups in the United States.
I guess the biggest, probably the biggest deal in decades.
But there are still a lot of concerns about the bill.
If you are somebody who is not too familiar with investing and you see an opportunity to invest in the small companies doing this whole thing, you think sounds pretty cool and you reach some articles somewhere and says this is a great investment and say I'll put my money in.
It sounds like a sure thing.
Well, it's not a sure thing.
Most small businesses fail.
The SCC along with other investor protection groups have added to the criticism.
The North American Securities Administrators Association released this statement.
The Jobs Act sacrifices essential investor protections without offering any prospects for meaningful, sustainable job growth.
But experts say ultimately the jobs act may not change the way most tech start-ups get funding.
Most of them will continue to raise money through Angel investors, venture funds or self-fund.
To raise money this way means to deal with a large number of investors you don't know and who you may not trust.
For CNETNews.com, I'm Simi Das.